Mining firm plumbs the depths with £30m retention payment for Chief Executive

Mining may be a dangerous and dirty business (as well as one that is profitable for its owners and shareholders) but a retention payment of almost £30m over the next three years for the Chief Executive of a newly-merged Anglo-Swiss mining firm seems somewhat over the top!

As reported on the BBC website, Mick “The Miner” Davis  of Xstrata has been offered £9.6m as "retention payments" for each of the next three years if (and surely this must be a big “if”) shareholders approve,  and he agrees to stay on as boss once Xstrata’s merger with Glencore is completed.

It won’t come as a surprise to learn that Davis is already one of the best paid bosses of a FTSE 100 company.  But he’s not the only one of Xstrata’s employees who is in line for a significant retention payment: In total, 64 of Xstrata's senior employees are being offered £46.4m in retention payments (basically being paid for turning up!) for each of the next two years. The rationale behind this is that these managers are “critical for our businesses and whose continued employment is key to integrating the two businesses and maintaining and enhancing the value of its operations and growth projects".

But just how critical can these roles be?

A recent report on BBC Radio 4’s More or Less programme revealed that bosses of the UK's biggest companies earn millions in "excess remuneration", and that pay packages designed to incentivise FTSE 100 chief executives had little effect on company performance.

Independent research for the programme compared profit growth and total shareholder return against the total realised pay earned by bosses between 2008 and 2010.

They found (for example) that former Reckitt Benckiser boss Bart Becht earned £138.6m more than the performance of his company justified - an 1,199% overpayment.

Dr Hermann Stern, chief executive of Obermatt (an international financial research company specialising in indexing operating performance) found that “there was absolutely no pay-for-performance link in the UK for those three years. Remuneration committees never want to pay below average. They are more worried about retention than performance. So this has led to spiralling pay inflation.”

Whether worry over retention can ever justify a retention payment of almost £30m is clearly questionable, but it will be interesting to see whether the “shareholder spring” which has led to major shareholders expressing serious concern over excessive pay and bonus packages will extend into the depths of the mining industry.

Equally concerning, however, is the relative silence in the HR community over an area which demands a response from the UK’s HR professionals. Surely our role is to direct and control executive reward, not just administer it!

The Not-So-Secret (but rather embarassing) Diary of an HR Blogger

Me.

Me, me, me, me, me, me, me.

Is that what blogging is supposed to be about?

Being loaned a couple of rather excellent books on the power of blogging (admittedly from the standpoint of a business rather than an individual) has given the editorial team of HR Case Studies the opportunity to reflect on the content of many of the HR-related blogs that grace the internet with their presence on a daily basis. 

Sadly, many of today’s HR blogs appear to resemble the juvenile musings of the 21st century equivalent of the Secret Diary of Adrian Mole; the blogosphere being treated to daily updates on the writer’s mundane activities or (if you are lucky) their views on recent developments within social media (frequently chastising those organisations which do not entirely and unequivocally embrace its use within the workplace).

For example, the six short paragraphs of one HR blog analysed as part of the in-depth research for this article contained the pronoun “I” 14 times (and that’s ignoring all the occurrences of “me”, “mine”, “my”.) 

To be honest, the contents of many HR-related blogs are, quite frankly, rather embarrassing, especially where they attempt to offer a glimpse into the soul of the writer. 

One of the problems with contemporary blogging is the ease with which anybody and everybody can not only unleash their views on their readers, but also fool themselves into thinking that, just because the number of page hits is high, therefore their daily updates of “What I learned at the employee engagement conference” are actually of any real significance.  

With information, opinion and trivia being thrown at us from every corner of the internet globe in which we live, the ability to filter out the dross from the profound is an increasingly essential one. But many of us within the HR blogging community seem to be making our collective task all the more difficult by serving up a daily diet of McWaffle. 

Come on HR bloggers! We're all entitled to our 15 minutes of fame. But that doesn’t mean you need to foist your introspective musings on the world every day of the week. If you're really writing for yourself, buy a diary and unburden yourself within its pages. Then hide it under the bed. But leave the blogosphere for those who have something significant and challenging to say.

An Enormous Request For A Lot Less Passion

For a function that frequently has the need for its existence called into question, HR currently seems to currently be inviting ridicule of epic proportions by the way in which it is talking about itself, particularly in the blogosphere and the twitterverse.

I’m therefore making a heartfelt plea to all of us within our beloved HR community to stop referring to each other in vomit-inducing terms.

Let’s look at a couple of examples:

On twitter, I am followed by a guy who describes himself as “a learner, teacher who is passionate about developing people to embody higher wave of Authentic Living”, and also a lady who is, apparently, “making the world a better place - helping people to shine - living life to the max.”  

Here’s a test: imagine that either of these two had just walked into a house-warming party in their neighbourhood, and someone asked them who they were and what they did. Would either of them ever describe themselves in the terms which are used in their twitter profiles? I seriously hope not. Or, if your fellow passenger on the flight from Manchester to Berlin introduced himself as someone who was “passionate about developing people to embody higher wave of Authentic Living,” could you manage to resist the need to reach for the vomit bag? I certainly couldn’t.

The examples above are by no means isolated instances either. Twitter is littered with (judging from their comments) lacklustre HR people who nevertheless describe themselves as Keynote Speakers, Ninjas, Gurus, Thought Leaders, Mavericks and Global Strategists. Very few indeed are anything at all what they claim to be in their hilariously worded profiles.

Right. Onto my soapbox for an even more vitriolic rant:

HR people: for heaven’s sake, stop describing yourself as “passionate” about what you do. Especially when it’s applied to activities such as organisational change or personal development. To be passionate is to be “dominated by or easily moved by strong feeling, especially of love or anger.” Is that the way people really and honestly feel about HR activities?

That you may be passionate about the ailing fortunes of Preston North End football club, I will allow. That you may be passionate about the all-too-few ECM albums of Keith Jarrett’s European Quartet (or the wonderful new album by Magnus Öström) I can grant. Perhaps if Opera is your thing, it may be the gut-wrenching arias in Julius Caesar by Handel. That you may be utterly passionate about your re-discovered lover, I will accept without hesitation. To be passionate is to be awake in the night thinking about the object of your passion, to miss meals, to suffer withdrawal symptoms when you cannot get what you desire. But to claim that you experience such feelings when you are involved with restructuring an organisation for optimum performance or (when it boils down to it) matching an individual with a learning and development opportunity is, quite frankly, ridiculous.

The thing is, I know I’m not the only HR person who feels the bile rising when I read such over-inflated verbiage. But what makes matters worse is there’s a whole world of non-HR people out there who are laughing up their sleeves when they see the HR community use meaningless and inappropriate terminology when they describe their activities.

If we want the HR profession to be treated seriously, a good place to start would be in the way we talk about ourselves and what we do. 

So let’s commit to use words that people recognise and understand, not ones that have them reaching for the sick bucket

Another New Year's Resolution for the HR Profession

Hot on the heels of yesterday's plea to check out the sources of information before sending it spinning into the HR community comes another resolution that we are going to adhere to in 2012:

Just because a statement contains some detailed statistics, we are not going to automatically accept it as the truth.

Let's look at recent example taken from HR Magazine and widely circulated online:

UK talent acquisition cost stands at £5,311 per hire. Cost per hire is a key metric of talent acquisition spending since this measure indicates hiring efficiency and productivity. While spending on talent acquisition also rose 6% in the US, companies there spend $3,479 per hire, or the equivalent of £2,226. 

Sounds so accurate and precise that it must be true. But learn from yesterday's example, and check out the source of the statistics, and you'll find they originate from an organisation who "will rapidly identify your organization’s key issues, benchmark your strengths and gaps, and engage in an ongoing dialog to drive impact." So let's say that they have a vested interest in getting you worried about your recruitment costs.

But, regardless of the origin of the statistics, they are clearly implausible and are also (it would seem) based on a fallacy.

The figures assume that all organisations use headhunters and agencies to fill some or all of their vacancies. They don't.

The figures assume that all organisations incur excessive costs through the advertising of their vacancies. They don't.

More significantly, such figures include the cost of "management time" derived from the salaries of those both inside and outside the recruitment team. This implies that, particularly in the case of the recruiting manager, there is a "proper job" that he should be doing, and that involvement in the recruitment process is a diversion from a task of greater importance.

But that is nonsense! The days of management passivity in the recruitment process are long gone, and many organisations now make active involvement in identifying new employees a crucial part of the manager's performance objectives. Not only HR, but line managers themselves now see total integration into the recruitment process as vital to adequately sourcing members of their team, and regard this involvement with as much seriousness as any other part of their job description.

Robin van Persie may be paid to score goals (17 this season so far, I believe!) but he's earning his keep just as much when he clears a ball off the line. Same with managers. So don't make it appear that recruitment is peripheral to what they do.

My New Year's Resolutions For HR

Do you recall the episode of Outnumbered in which Karen misunderstands the concept of New Year's Resolutions and, rather than making them for herself, she makes a list for her mum?

Well, dear HR Community, that's what I'm going to do for you today and tomorrow. Fortunately there are only two items on the list, but if we all stick to them, we'll make the world a far better place for everyone to live in!

Here's today's resolution:

We will check out the sources of any article before we distribute it to the wider world.

I have a specific issue in mind, and that is the oft-circulated and quite clearly untrue assertion that (and I quote) "90% of recruiters and hiring managers have looked a candidate’s social media profile (primarily Facebook and Twitter) as part of the screening process."

It isn't true. And ten seconds of thought would lead anyone to that conclusion. Are any of us actually gulllible enough to believe that 90% of (say) the companies in the FTSE 100 index (that's 90 companies if your maths isn't very good ... ) have HR Teams that have sufficient time to trawl through Facebook and Twitter profiles in search of Dark Secrets concerning their potential new recruits? Anyone who actually works in such an organisation will laugh out if you ask them if such activities are a normal part of their workload. There are far more pressing activities to complete and deadlines to meet than playing the HR supersleuth.

The reason that this myth is perpetuated is that we are encouraged to believe it by organisations with a vested interest in making people concerned about their online presence.

The particular offender here is Reppler who regularly feed the fires of candidate paranoia with alarming statistics on "the habits of hiring professionals." Get real HR people! Reppler are an "Online Image Management" business, whose marketing pitch is "Whether looking for a job or building up your career, it is important for your online image to represent you professionally and consistently." Their US-based research ("conducted among a random sample of 300 individuals involved in the hiring process at their company") does not stand up to scrutiny, and flies in the face of the facts.

They have a product or a service to sell, and they are appealing to the fear factor in the desperate (or possibly just the conscientious) applicant who appreciates that the current job market is a jungle, and who therefore wishes to use every tool at his or her disposal to give themself an edge over other competitors.

So please, please, please, dear HR colleagues: don't take such mouthwatering pseudo-facts at face value and mindlessly hurl them into the crowd. Read, think, and exercise some professional judgement and common sense before spreading unverifiable gossip!

I conclude this particular resolution by repeating the challenge previously made in the pages of this humble blog for anyone who is formally involved in the recruitment process to explain just how frequently they indulge in the Dark Practices that some would like us to believe.

Any takers?

Lady Gaga: My Life in HR

Readers may be surprised to note that, despite being nominated as an “alternative” keynote speaker for the 2012 CIPD Conference, Lady Gaga has currently polled only one vote on the HR Case Studies poll.

The editorial team managed to catch up with the provocateuse of pop in the middle of her “Born This Way” tour, and ask her if she’s surprised with her low popularity rating.

Editor: Despite your popularity in the world of pop, you’ve not received many votes in support of you speaking at next year’s CIPD Conference. Why do you think that this might be?

I guess it’s probably due to the fact that most people only know of my music work, and are unaware that for me pop superstardom is just a sideline. What gives my life most meaning is the work I do as HR Director for the American Bacon Federation. Like all HR roles, it’s a stressful job, and my music career started off just as a way of de-stressing after a busy day in the office.

Editor: What are the major challenges that you’re currently facing in your HR role?

Well, within the American Bacon Federation we’re really forward-looking in a lot of what we do, so we’re considering the introduction of an electronic timekeeping system to keep a record of employees’ working time, and we’re also looking into the introduction of single-status canteens in our head office.

Editor: I hear that you’ve also been working with a few UK organisations on the internal design of office space. Can you tell us a little about that?

Sure. I think that organisations need to be increasingly tolerant of all the different belief systems present in the workplace, and currently those who espouse a bacon-focused way of life seem to be neglected. At the ABF we’ve recently converted a spare office into a space for those with a devotion to bacon to practice their belief system. I think it’s important for employees to be able to take a short break from the relentless pressure of the modern workplace and just unwind in a bacon-infused environment.

To make sure that we’re inclusive, the bacon sanctuary also features interchangeable stained glass windows so that those employees with more of a devotion to cheese or sardines can feel at home in an environment where they are surrounded by images which reflect their beliefs.

We’re also working closely with an aromatherapy consultancy to explore the circulation of various food-related scents into the open-plan offices. So far, a pilot project has delivered great results, and there’s a demonstrable link with output. At the ABF we’re calling it the Pong-Productivity Effect.

Editor: If you were to speak at next year’s CIPD Conference, can you give us an idea of what you’d be presenting on?

It would have to be the importance of using bacon in any employee well-being programme. 

Editor: Thanks for that. I’m sure that you’ll be receiving a lot more votes now that people realise the contribution that you’ve been making to HR.

You're going the wrong way!

This morning my car is currently sitting in the small office car park where I work.

Nothing particularly newsworthy in that, I hear you say, but it actually represents a painful lesson learned over the last 48 hours.

For the last 12 months I have taken the same route to work. It's a journey of about 15 miles across the outskirts of London and normally takes me about 40 minutes through typical stop/start urban traffic. I measure if I'm on schedule against what's on the Radio 4 Today programme at particular stages of the journey: To arrive at work on time I need to be in the car by the business news, at Tolworth roundabout by the sports update, and driving over Kingston Bridge by Thought For The Day.

I've been convinced that my route to work is the shortest and fastest that I could take, and I've disregarded advice from those trying to persuade me that there are better routes to follow.

But yesterday there was serious congestion in the early part of my journey, and I decided to turn back and try a different route rather than just sit in the non-moving traffic. I was surprised at how free-flowing the traffic was and, even allowing for the disrupted journey, I arrived at work at pretty much the same time as normal.

So this morning I tried an alternative route to work. Simply turned left at the first set of traffic lights rather than driving straight across. Yes, you've guessed it: the route is shorter, faster, more free-flowing (and also more picturesque!) than my previous one, and it also means that I get to work early enough to claim one of the few coveted spaces in the car park.

So here I am, wishing that I'd tried a different route a long time ago. Just think of all the time, petrol and money I would have saved by listening to the advice of others and not stubbornly believing that I knew best and that there was nothing to be gained by considering other options.

Extending this a bit wider, I wonder how many of us hold onto opinions, prejudices, convictions and groundless beliefs and constantly refuse to consider the views and insight of others? It's very easy to be so entrenched in a position that it would take much more than mere traffic congestion to get us to consider an alternative position. Realising that you're wrong about something isn't exactly easy, and often it makes you see that in the past you were a bit of a fool.

But to do so may well lead to something more significant than just a place in the car park!